Solar could make
dollars and cents

I’d like to know the relative electricity cost of utility scale solar and wind plants versus rooftop residential solar. In other words, how can I know whether to subsidize my utility’s alternative energy plant or renovate my own home?

Randy Wilson

Flagstaff, AZ

Making such a determination is complex, but you could start with “In My Backyard,” a new online tool by the National Renewable Energy Laboratory (NREL). You first need to know your electricity usage and what size solar photovoltaic (PV) system or wind turbine you could install. Then, using Google Earth maps and data on the amounts of sunshine and wind at your location, the tool will estimate the electricity you could get from a certain size wind turbine or PV array installed on your property.

The costs to install renewable energy systems vary greatly by location, warn researchers at the Lawrence Berkeley National Laboratory, which is supported by the Department of Energy (DOE). And kilowatt hour (kWh) costs vary by utility, as do state and local financial incentives. One piece of good news: The federal Investment Tax Credit was expanded and extended this year. It allows for 30 percent of the cost of your system to be deducted from your federal tax bill, and is good through 2016.

Comparing the cost of going it alone to that of simply buying green power through your utility is not a simple equation, either. You can support your utility’s renewable power infrastructure by paying a premium on your electric bill, or you can buy renewable energy certificates — also known as green tags — even if your utility does not offer green power (green tags inject renewable energies into the grid even if they don’t come back to you via your own utility). To decide which equation is better for you, compare the costs of those programs over the same time period with the cost of building and maintaining your own system (minus any installation credits and/or revenues from selling your excess electricity back to the utility). That would give you the relative costs and return-on-investment.

But that’s still not the whole picture: Another question is whether your home system can continue to produce energy more cost-effectively than your utility, as it brings more and more green energy sources into its mix. Lawrence Berkeley says no, essentially. A February 2009 report summarizing the costs of PV from 1998 to 2007 concluded that larger systems averaged a 25 percent lower cost than the smallest ones.

The same is true for wind power, says the American Wind Energy Association. The group’s February 2005 report calculates that a large wind farm can deliver electricity at a nearly 40 percent lower cost than a small one. It also can take advantage of economies of scale in lower operational and maintenance costs.

The bottom line is this: Decades ago, when widespread use of alternative energy was still only a dream, building one’s own private source of home power was the only way to get off the carbon-intense grid and ensure that your own energy needs left little footprint. But today, with considerably more renewable energy sources coming online or about to do so in quantum leap measures — and at much greater efficiencies than can be achieved privately — the best bet may well be to forego the go-it alone path and support your utility’s efforts to generate green power not just for your own household but for everyone.